Dippin' Dots Gets New Counsel

A Kentucky judge approved bankrupt Dippin' Dots Inc.'s
motion to employ new debtor counsel and approved the ice cream maker's
continued use of cash collateral at a March 30 hearing.

Judge Thomas H. Fulton of the U.S. Bankruptcy Court for the
Western District of Kentucky in Paducah also approved the motion by Dippin'
Dots' former debtor counsel, Farmer & Wright PLLC, to withdraw at the
hearing, court documents show. Fulton is scheduled to preside over a final cash
collateral hearing on April 16.

Frost Brown Todd LLC, Dippin's new counsel, filed an
application on March 16.

Dippin' may need to seek an additional debtor-in-possession
loan depending on how long the sale process takes, according to Bobby Guy of
Frost Brown Todd.

The company is currently operating with a $1.25 million DIP
from secured creditor Regions Bank.

Frost Brown Todd is "aggressively pursuing a sale of
Dippin' Dots" in order to maximize the value of the estate, Guy said.

Farmer & Wright filed a motion to withdraw as debtor
counsel on March 20. Greg Charleston of Conway MacKenzie Inc., serving as chief
restructuring officer, had advised the law firm that his actions could place it
in a conflict of interest, and had requested new counsel, according to court
documents.

Fulton was scheduled to preside over the hearing on March
22, then March 29, court documents show, but it was continued.

Samuel K. Crocker, the U.S. trustee, filed a limited
objection to Frost Brown Todd's employment on March 28, saying that the
employment shouldn't be unlimited because of the strict timeline in the case.
The objection was overruled at the hearing, Guy said.

"Instead, the UST proposes that this court constrain
FBT's representation of DDI to either the completion of the sales process
currently under way … or a total period of 90 days," Crocker said in court
papers.

The U.S. trustee also objected to FBT's compensation because
it's unlikely unsecured creditors would receive sale proceeds and that Farmer
& Wright provided services to the estate for "far less." The U.S.
trustee believes that the $20,000 per week that DDI requested as a weekly
budget for FBT fees should be reduced, court document show.

Farmer & Wright billed Dippin' $81,694.50 in legal fees
in the 19 weeks and five days it represented the company in the bankruptcy
proceeding.

Crocker also filed a motion to examine Charleston "relative
to the debtor's acts, conduct, property, liabilities and financial condition,
or to any matter which may affect the administration of the debtor's
estate," on May 1, court documents show.

The cash collateral order includes a carve-out of $20,000
per week for Frost Brown Todd's retention, court documents show.

Charleston was appointed chief restructuring officer on
March 6, when Fulton approved an agreement to resolve issues between the
debtor, its former president and creator Curt Jones and secured lender Regions
Bank.

The group filed a motion on March 6 for an order approving
an agreed-upon stipulation that would resolve Regions' motion for a Chapter 11
trustee by appointing a chief restructuring officer. Dippin' also filed a
motion seeking a second debtor-in-possession loan from Regions.

Through the motion, Dippin' withdrew its borrowing motion
and Regions withdrew its trustee motion, with the option of filing a second
trustee motion if the chief restructuring officer is incapacitated or displaced,
court documents show.

Jones invented Dippin' Dots in 1988, using a cryogenic
encapsulation process he pioneered that flash-freezes ice cream in small beads.
The process differs from the freeze-drying of food used by NASA for astronauts.
As a result, the ice cream can still melt.

Todd Farmer of Farmer & Wright did not return calls for
comment.

Regions' counsel, Brian H. Meldrum of Stites & Harbison
PLLC, also did not return a call for comment.